Oil price rises on encouraging economy news

The price of oil rose Wednesday with investors focusing on upbeat news about the U.S. economy.

Benchmark crude rose 32 cents to end the day at $92.51 per barrel in New York, while Brent crude lost 20 cents to finish at $109.34 a barrel in London.

Prices headed higher following a report that said the private sector added 111,000 jobs in October. The Automatic Data Processing report said most of those gains were in the services industry.

Oil slipped from its afternoon high, however, after the Federal Reserve ended a two-day meeting with no new policy announcements.

The Fed can have a big influence on oil prices. Its decision last year to pump $600 billion into a bond-buying program sent ripples through currency and commodity markets that effectively propped up the price of oil. Benchmark crude climbed 20 percent higher in 2010 from August to November.

Fed officials said Wednesday that the economy is getting stronger and consumers are spending more, but there is still downside risk. The central bank said it could take more steps later, if the economy stays sluggish.

The Energy Information Administration said Wednesday that U.S. oil and gasoline supplies rose last week as demand fell. The EIA report also showed that distillate supplies, which include diesel and heating oil, dropped more than analysts expected last week on stronger demand and increased exports to foreign countries.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said diesel demand is soaring as farmers harvest their crops, energy companies expand oil and natural gas drilling operations in North America and other U.S. industries expand.

Retail diesel prices are 80.1 cents higher per gallon than they were a year ago, and those prices should keep rising, Kloza said. Most American drivers don't buy diesel for their cars, but they may still notice the price increases in the form of higher fuel surcharges when they send overnight packages, or when they order things online.

"These price increases are going to move through the system," Kloza said. "You may have to pay more."

At the pump, gasoline prices fell less than a penny on Wednesday to a national average of $3.432 per gallon, according to AAA, Wright Express and Oil Price Information Service. A gallon of regular is cheaper than it was earlier this year, when the national average approached $4 per gallon. But it's still about 63 cents higher than at the same time last year.

In other energy trading, heating oil lost 3.72 cents to end at $3.0007 per gallon, while gasoline futures were flat, finishing at $2.6272 per gallon. Natural gas lost 3.2 cents to end at $3.749 per 1,000 cubic feet.